January 27, 2008

The Democratic nominee for President will be either Hillary Clinton or Barack Obama, no doubt. I think Hillary is not only more electable but will bring with her far more resources in terms of actually changing the course of this country, not the least of which is her husband, Bill. In many ways Bill Clinton's Presidency was one shining hour in between the crap heaps of the two Bushes. True, not everything he accomplished has turned out to be the best for this country, namely, repealing the Glass-Steagall Act which led to the sub-prime mortgage mess and NAFTA. But he did balance the budget, something that all Republicans, for all their conservative rhetoric, have failed to do since (and including!) Ronald Reagan.

Barack Obama is a sharp guy, but he's long on rhetoric and charisma and short on actual experience. The Republicans will make mince meat of him in the general election, and he will be too easily co-optible in the Oval Office. The lobbyists and corporate power brokers will swoop down on him like there's no tomorrow. Hillary's pretty much immune to being tempted by the trappings of power, in my opinion. She's seen it all; she's done it all. She knows most of the world leaders, and she would bring with her a powerful group of intelligent people. Hillary's got the grit to withstand the Republican onslaught. Did I say that she's been through it once already? I think Hillary's values are tremendous, her heart's in the right place and she will restore some sanity to this nation's policies both at home and abroad.

Barack Obama is promising a lot of stuff that a President does not really have the where- withal to pull off. He's going to be a uniter. What does that mean? Does anyone really believe that all the white Republican southerners in all the red states are really going to rally around him? It'll never happen. I want a fighter not a uniter. That's realistic. I believe Hillary's a fighter, and she's got a good corner man in Bill. Together they have a wealth of experience and a proven track record. What's Obama's track record? He was against the Iraq war from the start? He gave a speech at the 2004 Democratic convention? Give me a break. Talk is cheap. The Iraq war is moot at this point except for getting the hell out of there, not leaving behind any permanent bases and stopping the torrent of cash going there that's bankrupting the US. Any of the Democrats will try to do that, but it will take political skill and experience to actually get the job done and stave off the Republicans who have invested heavily in making Iraq a US client state in the mideast.

I have already pointed out the difficulty any Democratic President will have in getting his or her agenda passed through Congress. It's not going to be a hayride, folks. Any Democratic President is going to have the same problem the Democratic Congress has had for the last year in getting anything done. The last thing we want is a President who doesn't know the ropes (Obama) and will spin his wheels for two to four years getting nothing accomplished. The last thing we want is a Democratic President who is going to play ball with the Republicans and corporate interests to continue business as usual. Obama may be inspirational, but we don't need inspiration at this point. We don't need to be "moved." We don't need a lot of long winded rhetoric promising this and that. We don't need naivete in the White House surrounded by novice advisors. Any fool knows what needs to be done. Hillary will just be more capable of doing it, that's all.

The last point is electability. My feeling is that it will be very tough sledding to get Obama elected. First of all no white southerner will vote for him. There's a lot of rednecks in the north who won't vote for him either, and he's red meat for the Republican hate machine. They'll try to skewer Hillary too, but she's had the experience of having been through it once, and she's a smart cookie. It won't be easy sledding for the Republicans this time. I think the smart Democrats (and I put the Clintons in this category) have thought this through and will be well prepared to deal with the Republican hate mongers this time around. Let the Lee Atwaters and the Karl Roves beware! They have been assasinating characters and destroying Democrats at will for far too long. I would hope the Democats would put up a decent fight this time, and I think Hillary is far more capable of doing so than Barack.

Barack appeals to the Democratic base more, but Hillary appeals far more to the general population of voters including moderates and independents, and, in the final analysis, getting a Democrat actually elected President is what it's all about. Another Republican in the White House and the US will go the way of the Roman Empire having lasted not anywhere near as long. Rome had its sage Claudius (correponding to Bill Clinton) after the disastrous Tiberius (Reagan) and in between Caligula and Nero (corresponding to the two Bushes). Let's hope that the lantern of enlightenment will be relit under Hillary Clinton!

January 24, 2008

A recent study has found that France is best and the US worst in rankings focusing on preventable deaths due to treatable conditions in 19 leading industrialized nations. This is considered an overall gauge of the quality of health care in the countries involved.

France did best -- with 64.8 deaths deemed preventable by timely and effective health care per 100,000 people, in the study period of 2002 and 2003. Japan had 71.2 and Australia had 71.3 such deaths per 100,000 people. The United States had 109.7 such deaths per 100,000 people, the researchers said.

After the top three, Spain was fourth best, followed in order by Italy, Canada, Norway, the Netherlands, Sweden, Greece, Austria, Germany, Finland, New Zealand, Denmark, Britain, Ireland and Portugal, with the United States last.

A key factor in the poor showing of the US is that 47 million US citizens lack any kind of health insurance while in every other case all citizens are fully insured by national health care insurance. If the US health care system performed as well as the top three countries, there would be 101,000 fewer preventable deaths per year.

But these studies miss the point. The US health care system is excellent for those who can afford access to it just as the education system is excellent for those who can afford access to it. The US is committed to a way of life that provides excellence for those who can afford it and crap for those who can't. This, of course, brings the averages down when people conduct studies based on overall measures of goodness or performance. Other advanced industrialized nations provide health care and education as a matter of course for all their citizens and hence are more egalitarian than the US. The US way of life is "Money talks; merde walks." In other words the US is based on privatized solutions to social welfare which are inherently unequal while other advanced countries are more socialist in nature. There is more of a welfarist component and a concern for the average citizen. The US government, at least under the Republicans, is committed to privatizing everything. Therefore, all welfare will be privately commodified and bought and sold with those who can't afford it forced out of the welfare market whether that market is for health, education, recreation, retirement or what have you.

In France education is free or almost free from the age of 2 through graduate studies.

Education is almost free at all levels (tuition $100 a year at Sorbonne) except for private schools and business schools. 26% of university students receive scholarships. But it is a fact that French Universities do not offer as many services and facilities as American univeristies and from this standpoint, only Grandes Ecoles compare to the US system.

Annual costs for a student at the prestigious Sorbonne are less than $300! Meanwhile, in the US students are paying $50,000. to $100,000. per year and have to borrow huge sums of money from predatory loan operations like Sallie Mae which used to be government owned but now is completely privatized and corporatized complete with huge CEO salary. Administrative costs (read CEO salaries and advertising) for private corporations are much higher in the US than in Europe whether it be for health care or education. The profit motive drives up these costs and makes the operations much less efficient than when the service is government provided to the public.

The Family system (Allocations Familiales) is a financial help to all families (whatever their income) plus various services such as day-care or vacation centers (according to income) ; when a family is expecting a child, it gets approximately 2,000 Euros in three installments (the first two of them corresponding to a mandatory medical visit, the third to the birth) ; then the family receives a monthly allowance till the child is 20 (for two children or more, around 100 Euros/month/child).

And the retirement system is provided by the state not by private employers or the stock market. In fact French funding for retirees is not invested in the stock market so it is independent of market fluctuations and boom or bust cycles. In the US employer provided pensions have been largely replaced with employee funded 401ks. The difference is that the employee must now bear the risks associated with the market and could well end up with nothing at retirement even though he or she has invested consistently over the course of a lifetime. Risks have been shifted from employer to employee.

In France social security provides about 750 euros per month (about $1125.) to anyone who has worked 40 years. Note that it does not depend on the amount of money you have made as in the US system where high wage earners who have paid more into the system receive more than low wage earners. Everyone receives the same amount.

Contrary to what most Americans believe, the French government run social security system is more efficient than US privatized corporate provided systems with the administrative cost of the health care system being around 4.5% (for US private insurance companies it's 10 to 13%) and 1.2% for the retirement system (vs. around 10% for most pension funds).

Finally, consider what kind of society you want to live in: one that exhibits compassion towards its citizens, one where there truly is a social contract, or one that is devoted to the private pursuit of profit at all costs including leaving a substantial number of its citizens by the wayside and out in the cold. Michael Moore dramatized the contradictions in US society contrasted with the beneficence of the French most effectively in his movie Sicko.

Health : by all standards the French health system compares very favorably to the US system. It is based on a moral and political consensus that protecting the health of citizens, and keeping them from what can be avoided in the trauma of illness and death, is one of the major responsibilities of the Society as a whole. Therefore, the State ensures that everybody is protected and people consider it to be in charge of controlling the quality of the health system and of regulating all its private and public players, including corporations which must contribute equally to it. The results : 100% people covered (see CMU), for a cost 30 or 40% [less than] America's (11,1% of GNP vs. more than 14% in the US) and with better results (see better ratios : life expectancy, infantile mortality, obesity, etc). The French are astonished when they are told that more than 40 million Americans have no health coverage (and even more no dental coverage). Being worried about the health bill does not exist in France. The social consensus is : "it is sad enough to be sick and one must not have an additional money problem about it". Saying "it is socialized medicine, therefore bureaucratic and inefficient" is ridicululous and wrong : look at the facts! See the WHO ranking : France comes first and read a column in the IHT ("French Lesson").

January 19, 2008

Whenever I go roaming about San Diego, whether by foot, car, boat or bicycle, I always take my camera with me because you never know when that perfect shot is going to be staring you in the face, and, if you don't have your camera, all you can do is say "Oh, darrrn, I wish I had a camera." Anyway here are some of my best shots of our city from 2007. Remember you can click on any of them to make them larger.

January 15, 2008

We couldn't wait to elect Democratic majorities in the House and Senate in the elections of 2006. We thought they would end the Iraq war and reverse some of Bush's insane policies. Then not much happened. Why? Two things: the filibuster and the veto. The filibuster, according to the way the rules are set up in the Senate at the present time, allows 41 senators voting as a block to defeat any legislation sent to it by the House. It takes 60 votes for cloture which amounts to ending the filibuster and allowing the legislation to proceed. Since the House and Senate both have to pass the legislation before it's sent to the President, the House is simply spinning its wheels passing legislation, which it can do with a Democratic majority, but which will get stopped cold once it reaches the Senate where it will be filibustered by the Republicans voting in a block. Unfortunately, this legislation will never see the light of day, and the House is wasting its time, but it makes the Congress persons look good. They can say "I voted for this and I voted for that," but it's all to no avail so why bother? Any legislation that does get through both the House and Senate can and has been vetoed by the President if it's not to his liking and any Democrat inspired legislation is not to his liking. So even with Democratic majorities in both the House and Senate, not much has changed.

The filibuster may be well established in the popular consciousness — think of long-winded senators speechifying for days. But because modern Senate rules allow lawmakers to avoid the spectacle of pontificating by merely threatening the act, filibusters and the efforts to overcome them are being used more frequently, and on more issues, than at any other point in history.

So far in this first year of the 110th Congress, there have been 72 motions to stop filibusters, most on the Iraq war but also on routine issues like reauthorizing Amtrak funding. There were 68 such motions in the full two years of the previous Congress, 53 in 1987-88 and 23 in 1977-78. In 1967-68, there were 5 such votes, one of them on a plan to amend cloture itself, which failed.

For policy making, this is the legislative equivalent of gum on a shoe.

It has produced a numbing cycle of Washington futility: House Democrats pass a bill, but Senate Democrats, facing a filibuster by the Republican minority, fail to get the 60 votes needed to end debate. Little wonder that approval ratings of Congress stink these days.

But, you say, wait till the elections of '08, and then we'll have a Democratic President and Democratic majorities in both the House and Senate. Surely, the Democrats will be able to bring about change at that point. Unfortunately, the prognosis is not good despite what the Democrats running for the White House say. They are promising change, health care, jobs etc. etc. But the reality is that the Republicans will still be able to defeat any Democrat inspired legislation with the filibuster. Granted they won't have the veto and a Democratic President wouldn't use it anyway. Whether it's Hillary or Obama or Edwards, they would be sitting there willing and eager to sign legislation to get the country back on track and to reverse the insidious policies of the Bush Administration. The problem is that they would need a filibuster proof Senate in order to do that. In other words they would need 60 Democratic seats, and they're not going to get them. They'd need to pick up 9 Democratic seats and keep the ones they have, and 6 of the 9 seats up for election are secure Republican seats according to all estimates. OK, so even if the Democrats win the White House, which is not altogether a foregone conclusion, nothing is going to get done because it would have to get through a Senate which is controlled by a minority of Republicans using the filibuster to defeat all legislation that isn't suitable to them.

So we would be right back where we were when Bill Clinton was in the White House. All legislation going to the President to sign would have to be triangulated which is nothing more than saying it would be Republican controlled. Do you really think Clinton would have repealed the Glass-Steagall Act (which led to the sub-prime mortgage mess), approved NAFTA and CAFTA (which led to the export of middle class jobs) and signed a bill on welfare reform without the Republicans breathing down his neck? His Presidency would have been quite different if the Democrats controlled the House and had a filibuster proof majority in the Senate. A new Democratic President in 2008 is going to be faced with the same situation. Since the Democrats have already demonstrated that they won't take the Republicans to the mat, and the Republicans have demonstrated that they will take the Democrats to the mat, the Republicans will remain in control of the nation even with a Democratic President and Democratic majorities in the House and Senate. It doesn't take Karl Rove to figure this out.

One possible way out of this morass would be to change the filibuster rule, to make the Republicans actually stay on the floor and filibuster rather than just say they were going to like the rules are set up now. However, it takes a two thirds majority to change the Senate rules and that's not going to happen any time soon. So forget that. We're stuck with a rule which effectively gives a minority of Senators voting in a block the power to defeat any legislation they so desire, and the Republicans have demonstrated time and again their willingness to use it. And, as we know, the Republicans play hardball. They will use every tool at their disposal, every weapon in their arsenal, to prevent any Democratic inspired legislation from ever getting to the President to sign into law. And the Democrats will capitulate because they are wimps and because some of them might as well have been Republicans. They won't vote as a block, and even, if they did, it wouldn't do them any good.

There is one other possibility, and that's been dubbed the nuclear option. The Republicans under Bill Frist threatened to use it. It boils down to a procedural end run around the filibuster.

In 2005, then Senate Majority Leader Bill Frist threatened to end Democratic filibuster of judicial nominees by something called the "nuclear option." It is actually a series of steps designed to bypass the two-thirds vote requirement to change rules:

The Senate moves to vote on a controversial nominee.

At least 41 Senators call for filibuster.

The Senate Majority Leader raises a point of order, saying debate has gone on long enough and that a vote must be taken within a certain time frame. (Current Senate rules requires a cloture vote at this point.)

The Vice President -- acting as presiding officer -- sustains the point of order.

A Democratic Senator appeals the decision.

A Republican Senator moves to table the motion on the floor (the appeal).

This vote - to table the appeal - is procedural and cannot be subjected to a filibuster; it requires only a majority vote (in case of a tie, the Vice President casts the tie-breaking vote).

With debate ended, the Senate would vote on the issue at hand; this vote requires only a majority of those voting. The filibuster has effectively been closed with a majority vote instead of a three-fifths vote.

This is exacrtly what the Democrats should do and should use, but they're such wimps that I'd lay odds they won't do it. They'll play nicey nice with the Republicans, they'll try to be "collegial," they'll sell out to the same corporate interests, they'll be eager to dole out pork to their home districts. Forget universal health care (unless it benefits corporate interests), forget the reversal of NAFTA and CAFTA, forget taxing the rich, forget anything that threatens corporate interests. Even if Edwards gets in, he won't be able to take on corporate domination of the government without a filibuster proof majority in the Senate or without using the nuclear option which is really the only hope for meaningful reform starting in 2009. If the Democrats are serious about changing the direction of the US, they need to use every tool available even if it provokes a confrontation with the Repuiblicans. The Republicans aren't afraid of confrontation. The Democrats shouldn't be either. They should do whatever's necessary to make majority rule prevail and defeat the filibuster which is antidemocratic and gives a small bunch of Senators representing a small number of citizens overwhelming power. Consider that California and New York contain huge populations. But they only have two senators just like sparsely populated Rhode Island and Wyoming.

The Republicans have turned this country into a corporatocracy and turned it away from a democracy. They've gutted the middle class starting with Reagan. Their agenda is to privatize everything: education, social security, health care. Do the Democrats have the guts to take them on and be as partisan in the implementation of their agenda? Have they even articulated a coherent agenda? I don't think so. The Republicans, at least, have a coherent philosophy and agenda. Where is the Democratic equivalent? If the Republicans can enunciate clearly their philosophy of privatism, the Democrats should be able to enunciate a philosophy which is a rational, balanced combination of capitalism and socialism. Are they afraid of the word? The Republicans aren't afraid of theirs.

January 13, 2008

Some CEOs are making $100 million a year. That translates into an hourly rate of $50,000, more than the average person makes in a year. Some people ask, "What is it about them that makes them worth so much?" Couldn't they find somebody who would do the same job for less? Well, obviously, they're not making that much based on their technical skills. There are a number of possibilities. 1) They are pushing the limits of legality, thereby making their company additional profits. 2) They are lobbying effectively to get laws changed which favor their company. 3) They have connections which will expedite an acquisition or merger. 4) They are greasing the palms of other board members who naturally feel that they (the CEOs) are the best persons for the job. 5) They are "cooking the books" resulting in an unwarranted stock run-up. At the CEO level, it is not technical skills that matter; it's a skill set that results in a vast increase in profits. That doesn't come about by making the best widget on the market. It comes about by opening new markets such as in the developing world. It comes about by reducing the cost of labor, and this comes about by transferring production facilities to that part of the world where labor is the cheapest. It comes about by lobbying for "free trade" such as the NAFTA and CAFTA legislation. This makes it possible to produce products elsewhere and then import them here without paying any tariffs. It also comes about by moving corporate headquarters anywhere in the world where taxes are the least and incentives (such as free land) are the greatest. Witness Halliburton's recent move to Dubai. There is no loyalty either to provide jobs for the American people or to pay taxes to the US government that might relieve the burden on tax paying individuals. Their only loyalty is to the bottom line.

In a Forbes.com article, "It Paid to Cheat," Maya Roney recounts how three executives, Charles B Wang of Computer Associates, Joseph P Naccchio of Quest and Dennis Kozlowski of Tyco misstated corporate earnings and were responsible for other accounting irregularities. Why? Their pay and stock options were tied to "performance" and large stock run-ups. Performance here has nothing to do with any technical expertise, but is simply the result of stock value increases or the lack thereof. No wonder then that CEOs are less concerned with turning out a good product or service for their customers than they are in getting the stock price to jump. Then they can cash in on those stock options and justify huge increases in their annual salaries based on "performance." How stock options work is as follows. The Board of Directors (who are usually cronies of the CEO) grants the CEO the right to buy so many shares of company stock at the current market value some time in the future. So if the share price goes up, the CEO can buy the shares at a discount and turn around and sell them at a profit. Sometimes there's a vesting period during which the CEO has to wait before he can sell his stock. Now the Board wouldn't be so generous to the CEO unless the CEO saw to it that the Board members also were given generous stock options so one hand washes the other. You scratch my back and I'll scratch yours. Now where do these shares come from? The number of shares outstanding is not related to any reality. They can be arbitrarily created by the corporation itself. They sometimes do it by splitting stocks. That means every share of stock outstanding is converted into two shares at half the market price. But they can just generate any number of shares any time they want to and sell them at the market price. No wonder then that the name of the game is to get the stock price up by any means necessary. This is how a good CEO earns his keep.

Goldman Sachs CEO Lloyd Blankfein will take home $70 million in 2007 most of it in stock options including a whopping bonus while other Wall Street CEOs got coal in their stockings. Why? Goldman Sachs didn't lose billions in the sub-prime mortgage mess like Bear Stearns, Morgan Stanley and JP Morgan Chase. How did Goldman Sachs do this? By lying essentially. They shorted or bet against their own investors in mortgage backed assets. So while they were cheerily selling mortgage backed asset debts to investors who proceeded to lose tons of money when homeowners defaulted, money that had to be paid (and therefore lost) by Citibank, Bear Stearns and Morgan Stanley in order to cover the short positions. Goldman Sachs due to their synthetic exposure to this segment of the market (basically betting against the success of their own investors) made out like a bandit. All perfectly legal forms of lying and stealing. And the successful CEO got rewarded while the unsuccessful ones who lacked expertise in manipulating the system got punished.

The chief executives of America's 500 biggest companies got a collective 38% pay raise last year, to $7.5 billion. That's an average $15.2 million apiece. Exercised stock options again account for the main component of pay, 48%. The average stock gain was $7.3 million.

The highest-paid boss of the 500 companies we tracked: Apple chief Steve Jobs. He drew a nominal $1 salary but realized $647 million from vested restricted stock last year.

The next four top-paid chief executives also earned most of their pay from exercised stock options: Ray Irani of Occidental Petroleum ($322 million total pay), Barry Diller of IAC/Interactive Corp ($295 million), William P. Foley of Fidelity National Financial ($180 million), and Terry Semel of Yahoo!.

So stock and stock options are very important for CEO pay. Parenthetically, Steve Jobs (and Bill Gates) are exceptions to my thesis here in that they actually created or were responsible for creating better widgets, namely the Microsoft operating system and the Apple Macintosh and ipod. Enron is a good example of a company who lied (through fraudulent accounting procedures), cheated (by deliberately manipulating markets) and stole millions by overcharging customers (including Grandmas in California).

"They're f------g taking all the money back from you guys?" complains an Enron employee on the tapes. "All the money you guys stole from those poor grandmothers in California?"

When Enron stock was near its maximum, CEOs cashed out; when its share value dropped to nothing, employees with stock options were left holding the bag. A disaster of deregulation, Enron was only one of a number of such disasters which included the savings and loan and sub-prime mortgage debacles.

On August 14, 2001, Jeffrey Skilling, the chief executive of Enron, a former energy consultant at McKinsey & Company who joined Enron in 1990, announced he was resigning his position after only six months.

"[T]he reasons for leaving the business are personal," said Skilling at the time, "but I'd just as soon keep that private." Observers noted that in the months leading up to his exit, Skilling had sold at minimum 450,000 shares of Enron at a value of around $33 million (though he still owned over a million shares at the date of his departure). Nevertheless, Kenneth Lay, the chairman at Enron, reassured analysts by affirming that there was "[a]bsolutely no accounting issue, no trading issue, no reserve issue, no previously unknown problem issues" prompting the departure. He further assured stunned market watchers that there would be "no change in the performance or outlook of the company going forward" from Skilling's departure. Lay announced he himself would re-assume the position of chief executive.

The next day, however, Skilling admitted that a very significant reason for his departure was Enron's faltering price in the stock market. The columnist Paul Krugman, writing in the NY Times, asserted that Enron was an illustration of the consequences that occur from the deregulation and commodification of things such as energy. A few days later, in a letter to the editor, Kenneth Lay defended Enron and the philosophy behind the company:

The broader goal of [Krugman's] latest attack on Enron appears to be to discredit the free-market system, a system that entrusts people to make choices and enjoy the fruits of their labor, skill, intellect and heart. He would apparently rely on a system of monopolies controlled or sponsored by government to make choices for people. We disagree, finding ourselves less trusting of the integrity and good faith of such institutions and their leaders.

The example Mr. Krugman cites of "financialization" run amok (the electricity market in California) is the product of exactly his kind of system, with active government intervention at every step. Indeed, the only winners in the California fiasco were the government-owned utilities of Los Angeles, the Pacific Northwest and British Columbia. The disaster that squandered the wealth of California was born of regulation by the few, not by markets of the many.

Oh yeah. I beg to differ, Mr. Lay. I think you could more accurately state that it was deregulation run amok combined with corporate greed that caused Enron's and your personal downfall. I could go on and on with scandal after scandal involving CEO lying, cheating and stealing. But one more example will suffice. Tobacco company executives lied to Congress in 1994 when they testified that they knew of no studies that cigarettes were addictive.

Tobacco company executives stood in front of the august body in 1994 and, under oath, said that nicotine was nonaddictive and that they knew of no studies linking cigarettes to cancer. The Justice Department tried to prove that the suits had lied, but the executives insisted that these were their personal viewpoints.

So there you have it friends. Now you know how CEOs attain their lofty positions and make tons of money. They make the market price of their stock go up not by producing better widgets but by throwing Americans out of work so they can reduce the cost of their labor input by hiring the cheapest labor wherever it exists in the world, paying the least in taxes, and, in general, lying, cheating and stealing.

January 11, 2008

Wall Street investment banks, hit by huge sub-prime mortgage losses, are turning to foreign banks to bail them out. Merrill Lynch, Wall Street's largest, is expected to suffer a $15 billion write down, and it's turning to foreign investors in Asia and the Middle East who are flush with capital to bail them out in return for a sizable stake in their company. These foreign banks are not bailing out Wall Street firms out of the goodness of their hearts. They are doing it in return for an ownership stake in the company. So not only are foreign companies telling the US government what to do (since they own billions in US government debt), they will now be ordering Wall Street around. And in addition they are buying up US companies and real estate at an unprecedented pace as we go further and further in hock due to our voracious appetite for oil, consumer goods and defense spending.

The developments underscore the rising toll that the mortgage crisis is taking on many once-proud Wall Street banks. In recent months Merrill and several other firms have grabbed financial lifelines from wealthy foreign governments. Further investments by so-called sovereign wealth funds could prompt scrutiny by Congress.

Sovereign wealth funds are government controlled funds set up by the world's exporting superpowers such as China and the Middle East oil producers. In the past they were content to invest in US treasuries i.e. to buy up US government debt. However, now they have turned to buying up the US private sector so more and more of the US is literally in the hands not of foreign private investors but of foreign central governments. This means that foreign central governments are increasingly in a position to control not only the US government but major US corporations and banking and financial interests.

In recent months, the Government of Singapore Investment Corporation, Singapore’s lesser-known government fund, invested $9.7 billion in UBS; Citigroup sold a $7.5 billion stake to the Abu Dhabi Investment Authority; and the China Investment Corporation poured $5 billion into Morgan Stanley.

If a foreign government takes another big stake in Merrill, Congress might ratchet up its scrutiny of sovereign wealth funds, which have ballooned thanks to rising oil prices and booming emerging markets.

On Thursday, Senator Charles E. Schumer, Democrat of New York, expressed concern about the amount of money American financial institutions are contemplating raising from sovereign wealth funds.

“Foreign investment, in general, strengthens our economy and creates jobs,” Senator Schumer said. “Because sovereign wealth funds, by definition, are potentially susceptible to noneconomic interests, the closer they come to exercising control and influence, the greater concerns we have.”

UBS is a huge Swiss bank that lost about $14 billion in the mortgage mess. Morgan Stanley announced on Dec. 19, 2007 that it would sell a $5 billion stake to the China Investment Corporation, that country's sovereign wealth fund, to shore up its capital. Citigroup, is now expected to write off $18.7 billion up from $11 billion, as the credit crunch deepens.

But it's not over yet folks.

Tanona said that after the projected write-downs, Citigroup would still be exposed to $24.5 billion of CDOs [collateralized debt obligations], Merrill $7.7 billion and JPMorgan $5 billion.

He said Merrill's write-down will be larger than previously expected because Thain [Merrill's CEO] will try to clean up problems now rather than let them fester in 2008.

The analyst boosted his forecast for fourth-quarter losses per share to $1.33 from 52 cents at Citigroup, and to $7.00 from $1.50 at Merrill. He cut his forecast for profit per share at JPMorgan to 65 cents from $1.04.

Analysts on average expect respective losses of 61 cents and $4.00 per share at Citigroup and Merrill, and a profit of $1.01 per share at JPMorgan in the fourth quarter, according to Reuters Estimates.

Brad Hintz, a Sanford C. Bernstein & Co analyst, on Thursday predicted a $10 billion fourth-quarter write-down at Merrill, leading to a quarterly loss of $5.10 per share.

Last month, Citigroup shored up capital by selling a $7.5 billion stake to Abu Dhabi's government. Merrill, meanwhile, on Monday announced a $6.2 billion infusion from Singapore's government and money manager Davis Selected Advisers.

Deregulation, repeal of the Glass-Steagall Act and unmitigatged free market capitalism have only served to place US sovereignty at risk as foreign governments buy up US federal and private assets. Foreign governments, who aren't as committed as the US to free market, unregulated capitalism, are eating our lunch. There must be a lesson in here somewhere. Could it be that a more rational approach to the role of capitalism, trade regulation and government's roll in balancing public and private interests is in order? Evidently, the CEOs of Merrill Lynch, Citibank, Bear Stearns and JP Morgan Chase, the lions of Wall Street, were clueless. Most of them were unceremoniously ousted. So how could you expect the hapless consumer of sub-prime mortgages, the average Joe Six Pack, to know what he was getting himself into? The people at the pinnacle of the US economy didn't know what they were doing and as a result they've handed over control to foreign central governments. This isn't the outcome that was projected! Only Goldman Sachs, that sold short its own investors, came out smelling like a rose!

January 08, 2008

Earmarkmeisters Robert C Byrd and John Murtha are the worst offenders in the process of bringing home the bacon for their home districts (who return the favor by re-electing them) at the expense of all the rest of US taxpayers (outside their districts). These guys, among others, just attach their pork to any appropriations bill without any oversight, debate or other psuedo-democratic process. They do it solely by virtue of their seniority on whatever appropriations committee they happen to be chairman of. So we end up getting bridges to nowhere, four lane highways that suddenly end in dirt roads, studies of ridiculous subjects that nobody is interested in. And nobody reads the final reports because they're apropos of nothing. And these guys are proud of their work in bringing home the bacon. They brag about it. They're not at all sheepish about bloating the federal budget and transfering tax liabilities to US citizens outsidetheir district.

What is an earmark?An earmark is a line-item that is inserted into a bill to direct funds to a specific project or recipient without any public hearing or review. Members of Congress—both in the House and the Senate—use earmarks to direct funds to projects of their choice. Typically earmarks fund projects in the district of the House member or the state of the Senator who inserted it; the beneficiary of the funds can be a state or local agency or a private entity; often, the ultimate beneficiary is a political supporter of the legislator. Earmarks are the principal means by which Members of Congress “bring home the bacon.”

What’s wrong with earmarks?It’s not so much any single earmark that is the problem, but rather the entire process. There is no transparency or accountability in the system; members can secure hundreds of millions of dollars of funding for a project without subjecting it to debate by their colleagues in the Congress, or to the scrutiny and oversight of the public. Because earmarks are hard to identify, some members use them to secretly award their biggest campaign contributors or, in the infamous case of former Rep. Randy “Duke” Cunningham, to exchange them for bribes. The secrecy of the earmarking process invites backroom deals and unethical—or even corrupt—behavior, part of a pay-to-play culture where lobbyists and contractors and well-connected individuals give campaign contributions to legislators in return for federal funding.

As the largest earmark porkmeister, Robert C Byrd, Democrat of West Virginia is not apologetic about his ability to bring home the pork to his constituents who then honor him by naming all their projects the Robert C Byrd this and the Robert C Byrd that. There's the Robert C. Byrd Metals Fabrication Center, the Robert C. Byrd Hilltop Office Complex, including the Robert C. Byrd Institute and the Erma Ora Byrd Conference and Learning Center, the Robert C. Byrd Federal Building and Courthouse in Charleston (not to be confused with the Robert C. Byrd Federal Building and Courthouse in Beckley), the Robert C. Byrd Expressway (not to be confused with the Robert C. Byrd Freeway or the Robert C. Byrd Bridge), the Robert C. Byrd National Technology Transfer Center at Wheeling Jesuit University (not to be confused with the Robert C. Byrd Science and Technology Center at Shepherd University or the Robert C. Byrd Technology Center at Alderson-Broaddus College), the Robert C. Byrd Highway, the Robert C. Byrd Locks and Dam, the Robert C. Byrd Telescope. CBS found more than 40 projects bearing the Byrd name. You know, this is just reprehensible that this doddering old fool is setting up so many monuments to himself in an unprecedcented show of vanity, egotism and corruption. No humility here. He wants every last vaingloroius vestige of personal adornment he can possibly squeeze out of a corrupt and reprehensible system that mocks white collar crime but is nevertheless perfectly legal because, after all, these are the guys who make the laws and of course they make them to favor themselvess and not to do right towards the American people in general. Since 1991, the "king of pork" has steered $3 billion in earmarks to West Virginia, according to Citizens Against Government Waste.

"Yeah man, you're lookin' at Big Daddy. Big Daddy!"

That's Byrd at the opening of the Robert C. Byrd Biotech Center, to which he generously gave $35.6 million of your tax dollars.

"Our effort to construct this facility and create a stronger foundation for the biotech industry here in West Virginia began where? With a visit to my office. Yeah. Yeah man," Byrd said. "A visit to my office, yeah."

What hubris and egomania!

Defense earmarks are also at the heart of corruption scandals threatening to sink Congress to new lows in public esteem. In November 2005, Rep. Randy "Duke" Cunningham (R) of California resigned from Congress and was later convicted of conspiring to take $2.4 million in bribes from two defense contractors for whom he sponsored earmarks. But, alas, poor Randy just didn't know how to play the game. He should have taken the bribe as a campaign contribution, and then that would have been perfectly legal. Instead, he took it as antique furniture, yachts, real estate and sorties with prostitutes. Defense earmarks as well as defense spending in general maintain the US status quo as a militarized national security state, one devoted to war spending rather than one devoted to spending on projects of peace and constructive efforts to provide jobs for people in other than war related pursuits. For instance, if the money went to building infrastructure or providing health care or housing or transporation, or research or to clean energy, this would be a constructive use of Federal money. Instead it goes to war and war related pursuits. The Defense Department should be renamed the War Department, as it formerly was, to suit a nation that is in the advanced stages of unremitting imperial pursuits and ambitions.

Democrat John Murtha is no better than the Byrd when it comes to porkbarrel spending. As chairman of the Defense Appropriations Commmittee, he has sent a steady diet of pork back to his home district. Johnstown, PA might as well be renamed Johnmurthastown for all the money he has singlehandedly injected into the local economy. The way it works with Murtha and others is that former Murtha staffers take over jobs as lobbyists for favorite firms who then benefit from Murtha earmarks and joyously make large contributions to Murtha campaign funds which money is then spent on buying TV ads telling the folks back home how wonderful Murtha is and would they really want to kill the goose who lays the golden eggs in return for some upstart who has no seniority on any appropriations committee? Nosiree, Bob. Thereby, Murtha is continually reelected. After pricking our consciences about the Iraq war, Murtha decided he better not carry the rhetoric too far because after all, he may be against the war but he's not against war spending. A slight inconsistency there, but he has a point. Let's at least spend the money on the right war. Maybe his conscience is bothering him after all.

Most people outside of Western Pennsylvania may known Rep. John Murtha as the guy who first called for the troops to come home. But the Wall Street Journal presents a withering portrait of the congressman today as "old-fashioned political boss" who, as the powerful chairman of the House Appropriations Subcommittee on Defense, has dubiously funneled billions of taxpayer dollars to his hard-luck hometown.

No one could say the hamlet of Johnstown, population 27,000, couldn’t use the cash. The small town 60 miles east of Pittsburgh was once the world's largest steel producer. But by 1983, its unemployment rate was more than 24 percent. Today, thanks to Murtha's ability to bring home defense contracts through earmarks on appropriations bills, it's around 5 percent.

But the Journal asserts that "Johnstown's good fortune has come at the expense of taxpayers everywhere else." Defense contractors have found that if they open an office there and hire the right lobbyist, they can get lucrative, no-bid contracts. Over the past decade, Concurrent Techologies Corp., a defense-research firm that employs 800 people, got hundreds of millions of dollars thanks to Murtha despite poor reviews by Pentagon auditors. The National Drug Intelligence Center, with 300 workers, got $509 million, though the White House has tried for years to shut it down as wasteful and unnecessary, the paper reports.

Murtha refuses to apologize. At a breakfast fundraiser this summer in Johnstown, he said that bringing federal dollars there "is the whole goddamn reason I went to Washington." And this is about the most G-rated thing that the Congressman -- who "curses like the Parris Island drill sergeant he once was" -- utters in the whole article.

So here's the game. Find out which Senators and Congressmen are on appropriations committees and then open a branch office in their home district. Hire former staffers of said Senator or Congressman as lobbyists. The lobbyists then get the earmarks and the corporartion then gives copiously to the politician's campaign fund which the politician then uses to get himself elected in perpetuity. Actually, this same game has been going on for years but not just with regard to earmarks. Research labs and companies that are private corporations or just governnment entities have been lobbying Congress for years in order to get money into their private corporation or government entity. This is what the military-industrial complex is all about. Civil service department heads want to get money into their departments so they spend most of their time lobbying Congress although it's not called lobbying when it's done by some civil service research lab. The end result is a chaotic assemblage of unrelated projects that serve no purpose as far as the overall strategy of the military is concerned and are soon forgotten as soon as the final report is written. What's wrong with this picture? It's a bottom up demand for funding for assorted unnecessary crap rather than a top down rational assessment of what's needed and then finding the best organization to do it. In short most funding is a wasteful and corrupt boondoggle. That's what the military-industrial complex is all about.

The following link is an aptly named blog on government waste, the Swine Line, http://swineline.org. I love it!

January 02, 2008

California Governor Arnold Schwarzenegger is suing the Federal Government because California wants to implement stricter standards for car emissions than the Environmental Protection Agency wants to allow. What? The EPA says no when a state wants to exceed their standards! It should be the other way around. They should be happy when a state or states wants to do even better than what the Federal Government mandates. But you have to remember that this Federal Governmenrt doesn't want so much to protect the environment as it wants to protect oil companies. Therefore, the more oil consumption the better, the more tailpipe emissions the better and hang the environment. Global warming, schmobal warming! Read it and weep!

California cannot bring in tough emissions laws without EPA approval

California is suing the US federal government over its failure to back the state's tough new anti-pollution laws regulating greenhouse gas emissions.

Two years ago, California passed legislation requiring car-makers to cut vehicle emissions by 30% by 2016.

But for the measure to take effect, the Environmental Protection Agency (EPA) must give its approval.

State governor Arnold Schwarzenegger said there was no legal basis for the EPA to stand in California's way.

An EPA spokeswoman said the agency planned to make a decision on the legislation by the end of December.

If the legal action is successful, 11 other US states have said they will follow California's lead on emissions levels, and five more are considering the move.

'Our future'

California needs the EPA to grant a waiver because the state's legislation seeks to implement stricter standards than those imposed under national law.

Arnold Schwarzenegger believes the environment is a key issue

Speaking at a news conference, Mr Schwarzenegger accused the federal government of "ignoring the will of tens of millions of people" by failing to approve the legislation.

He said: "Our future depends on us taking action on global warming right now.

"There's no legal basis for Washington to stand in our way."

The 16-page lawsuit filed by the state attorney general's office warns that greenhouse gas emissions from vehicles are rising more quickly than from any other source.

"The longer the delay in reducing these emissions, the more costly and harmful will be the impact on California," it said.

US car-makers are fighting California's plans to cut emissions levels in the courts.

Industry groups say the proposed standards would raise the cost of vehicles and could force America's embattled car makers into further difficulties.

In April, the US Supreme Court ruled that the EPA, which had challenged the California law, was wrong to say that it did not have the power to regulate exhaust gases from new cars and trucks.

In a separate move, Mr Schwarzenegger last year signed a bill making California the first US state to impose limits on the state's greenhouse gas emissions, with a target of 25% by 2020.

Read what two Republican governors have to say about standing up to the Bush Administration who never met a greenhouse gas emission they didn't like!

Lead or Step Aside, EPA

States Can't Wait on Global Warming

By Arnold Schwarzenegger and Jodi Rell

Monday, May 21, 2007

It's bad enough that the federal government has yet to take the threat of global warming seriously, but it borders on malfeasance for it to block the efforts of states such as California and Connecticut that are trying to protect the public's health and welfare.

California, Connecticut and 10 other states are poised to enact tailpipe emissions standards -- tougher than existing federal requirements -- that would cut greenhouse gas emissions from cars, light trucks and sport-utility vehicles by 392 million metric tons by the year 2020, the equivalent to taking 74 million of today's cars off the road for an entire year.

Since transportation accounts for one-third of America's greenhouse gas emissions, enacting these standards would be a huge step forward in our efforts to clean the environment and would show the rest of the world that our nation is serious about fighting global warming.

Yet for the past 16 months, the Environmental Protection Agency has refused to give us permission to do so.

Even after the Supreme Court ruled in our favor last month, the federal government continues to stand in our way.

Another discouraging sign came just last week, when President Bush issued an executive order to give federal agencies until the end of 2008 to continue studying the threat of greenhouse gas emissions and determine what can be done about them.

To us, that again sounds like more of the same inaction and denial, and it is unconscionable.

Under the Clean Air Act, California has the right to enact its own air pollution standards, which other states may then follow, as long as the EPA grants California a waiver. The waiver gives California, and other states, formal permission to deviate from federal standards. California has requested more than 40 such waivers over the past 30 years and has been granted full or partial permission for most of them.

By continuing to stonewall California's request, the federal government is blocking the will of tens of millions of people in California, Connecticut and other states who want their government to take real action on global warming.

The EPA is finally holding the first of two hearings on the waiver request tomorrow, and we welcome the opportunity to call attention to the harmful effects that global warming is having on people and the environment.

But we are far from convinced that the agency intends to follow the law and grant us our waiver.

If it fails to do so, we have an obligation to take legal action and settle this issue once and for all.

The threat is real. Scientists tell us that if nothing is done to stop the warming of Earth's atmosphere, we can expect an increasing number of droughts, greater risk of forest fires, a reduction in our snowpack, an increase in sea levels, more flooding in winter and hotter temperatures in summer.

There can be little debate anymore on whether the effects of climate change constitute a looming threat to the public's health and welfare.

Republicans and Democrats in statehouses around the country have already spoken loudly that federal inaction on climate change is unacceptable and have acted on their own initiative.

Whether it is Northeastern states uniting to reduce greenhouse gases from electric generators or Western states looking to reduce emissions throughout the economy, momentum is building everywhere but in Washington. The federal government should not stand in the way of dealing with the most serious environmental challenge facing the world.

While the United States represents just 5 percent of the world's population, it produces 25 percent of the world's greenhouse gases.

With the landmark legislation authored by former assemblywoman Fran Pavley and passed in 2002, California demonstrated that it is serious about cutting down these emissions from cars. Connecticut also has a strong record on greenhouse gas reduction, which includes adoption of California's tough standards for vehicle tailpipe emissions.

California, Connecticut and a host of like-minded states are proving that you can protect the environment and the economy simultaneously.

It's high time the federal government becomes our partner or gets out of the way.

Arnold Schwarzenegger, a Republican, is governor of California. Jodi Rell, a Republican, is governor of Connecticut.

January 01, 2008

The Republican goal is to privatize social security and medicare. But this doesn't necessarily have to happen in one fell swoop. It's happening quietly already with no fanfare, no outcry and right under our noses. When I signed up for Medicare in 2006, I was given the choice of signing up for traditional Medicare or the so-called Medicare Advantage plan. I should point out that this only has to do with Medicare Part B, the part that covers doctors' visits and not Part A, hospitalization, which is free. To make matters more confusing, there is Part D, the drug part, which was enacted in 2003 when they also revamped the Advantage plan which had been laying around dormant, I guess. The Advantage plan, seemingly, offers additional benefits that traditional Medicare doesn't for the same amount of money. For instance, you get a free annual physical exam which you don't get under traditional Medicare. Why not? If preventative medicine and early diagnosis save the system money in the long run not to mention human misery, you'd think the government would want every enrollee to have a free annual check-up as part of Medicare. In addition, the Advantage plan I signed up for (there are several available offered by different for profit, private corporations), Secure Horizons (part of United Health Care whose CEO Bill McGuire made $100 million last year), offered free eyeglasses every two years, an optional dental plan etc.

All these enticements were offered to get people to sign up for the Advantage plan which is privatized corporate sponsored health insurance rather than traditional government sponsored, single payer health insurance which is what Medicare is. So who wouldn't sign up for a plan that offered everything Medicare offered, but more! So what's the catch? When I signed up, I had to choose a primary physician and a hospital. I got to keep the doctor I was already going to and the hospital I would have prefered anyway so, seemingly, I was ahead of the game. I had also been going to a podiatrist for toenail fungus who was in the same network so I should have been able to keep seeing him, right? Not so fast. I needed a "referral" from my primary doctor or in other words, permission, to see the podiatrist and get reimbursed by Secure Horizons. He wouldn't give it to me because he didn't consider toenail fungus a serious enough problem to warrant my seeing the podiatrist. Neither would he treat it. So he was acting now as a "gatekeeper." Another ongoing situation was also now considered benign and nothing should be done about it. So I was denied seeing a specialist twice in a few short months. Now, granted, toenail fungus isn't life threatening, but it was covered under my Blue Cross health insurance prior to going on Medicare or Medicare Advantage. But a number of other life threatening problems have been denied to other people. That's how CEO Bill McGuire makes his $100 million, by denying people health care.

The advantage of traditional Medicare is that you can see any doctor or specialist you choose for a small co-pay. You don't need your primary physician's approval. So you can get second opinions. Another thing I found was that, as soon as I was signed up for Secure Horizons, I started getting tons of literature which, after I had waded through it, I discovered that its main purpose was to start rescinding some of the "advantages" I was enticed into signing up for in the first place. Like, for example, the "free" eyeglasses every two years. That little benefit was unobtrusively dropped. I started getting the feeling that, as time went on, any link with Medicare would be broken and I would be fully privatized right out of the system. Then my benefits would be reduced and my premiums would skyrocket.

There has been much criticism of the Medicare Advantage plans. For instance, the government literature and Medicare.gov website seems to make the Advantage plan much more attractive than traditional Medicare. The health care corporations pay the doctors more than traditional Medicare does for the same service making it more profitable for doctors to take on Advantage patients while rejecting traditional Medicare patients. Medicare Part B premiums keep going up so that the government, which pays the private corporations what they would normally charge the traditional Medicare recipient on a monthly basis, can pay them more each year making the advantage not to the patient but to the health care corporations. However, the more Medicare patients the government can off-load onto Advantage programs, the more money the government actually saves because neither the monthly premiums nor the payroll taxes that fund Medicare actually pay the full costs. It requires serpentine logic to make any sense of this but this is from the President's Executive Office of Management and Budget:

There is a common misperception that there is a Medicare surplus and that Congress must take action to preserve its assets. There is no Medicare surplus. Any excess cash collected from the payroll tax that is not used to provide hospital insurance is used for other Medicare spending such as doctor bills, which are not fully covered by premiums paid by beneficiaries. These premiums cover only about 25 percent of doctor bills and other costs paid from Medicare's other trust fund, the Part B, or Supplementary Medical Insurance trust fund. Additional funds come from the general fund of the government to cover Medicare's remaining costs. In fact, in 2002, without this general fund transfer, Medicare would face a $48 billion shortfall.

So the money essentaily comes from the government's general fund just as social security does (since the government borrows against payroll tax money collected for social security) making payroll taxes simply a farce. They are just a regressive excuse for burdening the middle class and poor while letting the rich off the hook tax wise. The increasing monthly premiums for Medicare Part B are wiping out cost of living social security increases for seniors:

Many Medicare beneficiaries could see next year’s cost-of-living increases in their Social Security checks much reduced by higher Medicare premiums that will grow by $11.60 a month in 2005, the largest annual dollar hike in Medicare’s history.

The Part B premium, which covers doctors’ and outpatient services, will rise from $66.60 to $78.20 a month, a 17.4 percent increase. Next year’s Social Security benefits, not yet announced, are expected to rise only 2 to 3 percent, the rate of general inflation.

Someone receiving a $600 check, for example, would get an extra $15 a month next year under a 2.5 percent cost-of-living increase, but the new Medicare premium would wipe out all but $3.40. "A 17 percent increase is alarming," says John Rother, AARP’s director of policy. "If that pattern repeats itself in future years, it means that nobody will get Social Security benefits that keep up with inflation."

The government under the Bush Administration is actually paying more to the private insurers per person than it's allocating for traditional Medicare. This allows the private insurers to pay its doctors more than they're paid for the same service by traditional Medicare and undermines the whole government program:

AARP's support of Medicare Advantage doesn't benefit seniors

Call it the riddle of AARP. It's truly puzzling why an organization that represents 38 million individuals 50 and over, many of whom depend on Medicare, would endorse a Medicare offshoot -- Medicare Advantage -- that siphons money from traditional Medicare and is seen by many as part of an effort to privatize Medicare.

AARP says in ads, "Discover the only Medicare Advantage health plan that carries the AARP name." The plan is provided by United Healthcare, among the nation's largest for-profit health insurers. The particular plan AARP has put its name to is a private fee-for-service plan, the fastest growing segment of Medicare Advantage, up nearly 300 percent in a recent 18-month period.

Why should anyone drop out of popular, tried and true government-run Medicare and opt for a private insurance plan?

The chief reason is that Medicare has been grossly overpaying the private plans to cover seniors who desert traditional Medicare. The generous payments make it possible to lure seniors with attractive premiums and benefits. In some places they even rebate the $93.50 monthly Part B premium. It's not unusual for Medical Advantage plans to offer enrollees free health club membership and zero premium for coverage that includes the Part D drug benefit without extra cost.

Of course, there is cost, including profits to the private insurer, but seniors are willing to enroll because it seems like such a good deal and because they may not realize that leaving traditional Medicare in the lurch weakens it for other seniors.

It seems clear that Republicans are trying to discourage seniors from enrolling in traditional Medicare and to discourage doctors from accepting traditional Medicare patients by reducing their payments for services under traditional Medicare:

The Medicare Payment Advisory Commission (MedPAC), Congress’ expert advisory body on Medicare payments, reported this month that Medicare is losing billions of dollars each year because of excessive payments to private insurance plans through the Medicare Advantage program. (Under that program, Medicare beneficiaries may elect coverage through private “Medicare Advantage” plans rather than through traditional fee-for-service Medicare.) Although private plans ostensibly were brought into Medicare to introduce competition and reduce costs, MedPAC has found that, on average, the federal government is paying the private plans 12 percentmore than it costs to treat comparable beneficiaries through traditional Medicare.

This year I decided to convert back to traditional Medicare starting in 2008 for several reasons: 1) I can go to my foot doctor again for a reasonable co-pay instead of his normal $140. charge for an office visit; 2) I don't want to support Bush's privatization plan for Medicare; 3) I don't want to support CEO Bill McGuire's $100 million annual salary and 4) if I did develop a serious medical condition, I don't want to be denied health care by my primary doctor acting as gatekeeper, the gate being to Bill McGuire's continued profits and fortune. At least at this point you can convert back. If the Republicans had their way - and some day they may - that link would be broken and once on the Advantage plan it would be impossible to go back. Then watch your benefits reduced and your premiums rise. I was told that I would have to get a supplementary "private" drug plan since traditional Medicare doesn't have an inherent drug plan while the Advantage plan does (another one of its "advantages"). Since I don't use any prescription drugs, I hesitated to pay additional for one, but then I was told there would be a penalty if I didn't sign up right then but wanted to later - another little tool to funnel money to private corporations. So I signed up for the least expensive at $20 a month with Humana. This is another disincentive for traditional Medicare - you have to pay extra for Medicare Part D, the drug part. So traditional Medicare will cost me more each month for less benefits than the Advantage plan, and I may be rejected by some doctors who won't even service traditional Medicare patients because they don't get reimbursed enough.

The whole Advantage program, like Medicare Part D, is nothing more than a plan to privatize and corporatize Medicare. At the same time health care corporation CEOs like Bill McGuire are making obscene $100 million salaries and sitting on a billion dollars in stock options. Once seniors are on private plans and government sponsored health care is undermined till it collapses, seniors will be forced to pay through the nose for less service. And the private health care corporations will do it like they do right now by denying people who really need them expensive health care procedures.

One of President Bush’s reasons for threatening to veto the expansion of the State Children’s Health Insurance Program, known as SCHIP, is that it would be financed partly by a cutback in something called "Medicare Advantage."

If you don’t know about Medicare Advantage, that’s no surprise. It is popular in California, Florida, New York, Ohio and Pennsylvania, where more than 30 percent of Medicare beneficiaries have signed up for it. But in Maine, New Hampshire and Vermont, fewer than 3 percent belong, and some doctors have never heard of it.

Medicare Advantage, heavily promoted by the Bush administration as an alternative to "socialized medicine," is a program that pays various private health plans to provide service less available under ordinary Medicare. Critics see it as an administration wedge intended to privatize Medicare, which now serves 44 million elderly and disabled people. About 8.7 million of them, 20 percent, get expanded Medicare benefits through these private plans.

Mainers are well off to avoid these Medicare Advantage plans, as shown by a chorus of criticism and condemnation. The American Medical Association reported in May that its survey "paints a bleak picture of physicians’ experience with Medicare Advantage plans." More than half of the physicians surveyed said their patients had been denied coverage of services covered by the traditional, government run, Medicare plan. Eighty-four percent said their patients couldn’t understand how the private plans worked.

AMA’s board chairman, Dr. Cecil Wilson, said: "The private health plans were supposed to inject competition into the Medicare program, but instead we’ve ended up with a federal handout to the insurance industry." He quoted government figures to show that eliminating overpayments to insurance companies will save Medicare $65 million over five years.